Debt financing terms
The outline finance terms below describe the terms under which any loan investment by the Building Scotland Fund (BSF) may be made to a requestor of finance (each an Applicant).
Any such requests for finance will need to satisfy the eligibility criteria for BSF financing and BSF’s appraisal process including due diligence, internal approvals and legal documentation as applicable to the particular request.
These are indicative characteristics of debt financing by BSF and are not binding terms for any financing facility agreement (the 'Facility Agreement') which will be negotiated separately. These terms are non-exhaustive and facility documentation may contain other provisions typical in this type of transaction.
These terms may not uniformly apply to all types of loans and actual terms will be negotiated and agreed on a case by case basis. Terms may be revised as further due diligence is undertaken or market conditions change.
List of terms
The Scottish Ministers acting through the Building Scotland Fund.
Legal entity identified by the Applicant and approved by the Lender
To be provided by the Applicant, and to satisfy BSF’s eligibility criteria. The project should support economic development in Scotland in a positive way.
Secured debt finance may be made available to Applicants.
To be confirmed by the Applicant as applicable
To be agreed based on the Applicant’s request, and assessed alongside other co-financing and sources of funds.
Subject to satisfaction of Conditions Precedent, the debt facility will be available for drawing by the Borrower for a specified period appropriate for each application.
Interest will be charged on debt finance facilities, in arrears and typically on a semi-annual or quarterly basis.
Expectations are that arrangement or other fees in line with market norms will be payable, to be agreed on a case by case basis in compliance with the applicable state aid regulations.
All costs and expenses (including legal, valuation, project monitor and others' fees and including any VAT thereon) incurred in connection with the negotiation, preparation and execution of the finance/security documents and any related documents (or any associated due diligence) shall be paid by the Borrower on demand whether or not a Facility Agreement is signed.
Final repayment date and repayment profile to be agreed with the Applicant. The maximum tenor of any BSF debt financing will be 30 years.
Early repayment will be required on usual mandatory prepayment events.
Standard for a facility of this nature including, without limitation, in form and substance satisfactory to BSF:
- evidence by way of a letter from the Borrower’s insurance broker addressed to the Lender, that the insurance cover in force in respect of the Project and Property complies with the terms of the Facility Agreement and the necessary premia have been paid.
- evidence that the Borrower's equity contribution (where applicable) has been made in proportion with the agreed funding structure on a case by case basis.
- provision by the Borrower of all necessary third party reports as existing or commissioned by the Borrower, including Valuation, Report on Title and feasibility study all addressed to BSF
- erovision by the Borrower of the relevant Project documents, including (if relevant), budgeted costs, building contract and specifications, copy of each consultant appointment, collateral warranties from contractor and consultants, copies of the development consents, report on the development documents by the Lender appointed project monitor and required permissions/consents.
- erovision by the Borrower of all corporate, constitutional, KYC and ownership documentation as required by BSF
- erovision by the Borrower of all financial information of the Borrower and any Guarantor, including audited financial statements and/or pro forma balance sheets, as required by BSF
- any other conditions deemed relevant following BSF's due diligence
Representations and Warranties
Standard representations and warranties for transactions of this nature. Certain of the representations will be repeated on the date of each utilisation request
BSF will generally seek security for its investment which is standard for a debt facility of this nature. Indicative security may include, but are not limited to:
- fixed charge giving first ranking security over the Property
- a floating charge/debenture giving first ranking security over all assets and undertaking of the Borrower
- a charge over the issued share capital of the Borrower
- a charge over any building contract and all other relevant development documents (including any performance bond/PCG provided in respect of the Building Contract) and to include step in rights
- collateral warranties from the building contractor, members of the professional team and sub-contractors with design responsibility, to include step-in rights
- corporate or personal guarantees, where considered appropriate by BSF
- account charges over the bank accounts of the Borrower
- any other security deemed relevant by BSF or its advisors
Events of default will be standard for transactions of this nature.
Expectations are that undertakings (including financial covenants) will be in line with market standard for transactions of this nature.
Expectations are that ongoing monitoring information requirements from the Borrower and/or the Applicant will be in line with market standard for transactions of this nature. Monitoring information requested may include audited financial statements, management accounts and monitoring reports of the Project and Property valuations in addition to such other information as BSF may reasonably request regarding the financial condition, business and operations of the Applicant/it’s group.
The Building Scotland Fund may at any time transfer the whole (but not part only) of the debt and facility/security documents to another public sector body without the written consent of any other party.
Law of Scotland
Building Scotland Fund Team
Economic Development Directorate
5 Atlantic Quay
Telephone: Central Enquiry Unit 0300 244 4000